Can Financial Services for Inmates Reduce Recidivism, or Is It a Recipe for Trouble?

Michael Benanti spent 16 years in prison for conspiring to rob a bank. Now he is a banker of sorts for a captive audience.

Five years ago, Mr. Benanti launched Prisoner Assistant Inc., a company that helps inmates set up bank accounts, start establishing credit and conduct a variety of services that are difficult to perform from behind bars.

Mr. Benanti, 41 years old, believes people who leave prison with a banking...